Question

Thomas charged $2,400 on his credit card to buy furniture. the interest rate charged by the credit card company is 24.9%. after one month, the minimum payment on the debt is $50. how much will he owe after he makes the first payment

Answer 1

If the interest is compounded continuously:
A = Pe^(r)(t) - 50
A =2400e^(0.249)(1/12) - 50 = $2400.32

Answer 2

The answer is $2399.80.

Explanation:

The APR is = 24.9%

So, per month rate is =
`24.9/12/100=0.02075`

After a month Thomas has to pay interest on $2400 at 2.075%

=
`2400*0.02075=49.80` dollars

Now, the total amount due at month end is :

cost of furniture + interest on credit card

=
`2400+49.80=2449.80` dollars

As given, Thomas has to pay minimum $50.

Therefore, after this 1st payment of $50, the amount he will owe is :

=
`2449.80-50=2399.8` dollars

The answer is $2399.80.